Comparative advantage and the unemployed

Yesterday I wrote a few words about the law of comparative advantage in economics. The most surprising part of that law to many people is that the more backward nation is still economically important to human wealth even if it is comparatively at a disadvantage to all other nations. This comes from the part of the law which tells us that each nation should be concentrating on doing those things that they are most best at.

The law of comparative advantage applies to individuals as well as nations. For example, if we have a very good surgeon who happens to be the best auto mechanic in the city, because he always loved cars and put himself through medical school by working for Goodyear, he still will send his own cars out to the auto shop now because his time is so much more valuable as a Doctor rather than a mechanic. This example is easy to see but it works the same for everyone in town. And even if he happens to be a gardener with a very “green thumb“, he will still be better off letting someone else mow his grass and weed his flower beds. Most people pay to have all kinds of services done for them even though they could do these services themselves. The couple across the street has a mobile dog grooming van in front of their house every week!

The meaning of all this is that there is something for everyone to do if government does not get in the way with intrusive, invasive, counter-productive legislation. For example, most people would pay a little bit extra to have their gas pumped for them by someone. They would even appreciate the fellow pumping the gas to check the pressure in the tires and to check the oil level as an extra service. Don’t believe that? It was standard in this country until the government made the cost of employing these young men prohibitively high. Now young men sit idle and unemployed while everyone pumps their own gas. A crying shame.

Laws which set the “minimum wage” force people out of work and then they get no wage at all. Laws that force the employer to provide expensive employment benefits, like health insurance, also are job killers. Laws that prevent entry into a line of work are also employment killers. I read that it takes time, money, schooling, and a piece of paper allowing employment just to braid the hair of another women for pay in New York City. That is beyond crazy. I read that the right to run a cab, to have a “medallion”, in New York City has recently gone to over one million dollars! A poor man and his car may not drive you around for money even if both of you wish he could — the ruling masters say no.

The Austrian School of Economics proved long ago that the natural rate of unemployment is zero percent. Everyone who can work and wants to work can do something for others. A few may be “between jobs” as they change employment but the kind of unemployment rates we see in America are the “gift” of an invasive government that hurts so many of the most disadvantaged among us. Murray Rothbard wrote an essay called “Outlawing Jobs” back in the early ’80s. It is a short read and still worth a look even a quarter century later. In that small essay he pointed out:

Once in a while, AFL-CIO economists and other knowledgeable liberals will drop their mask of economic fallacy and candidly admit that their actions will cause unemployment; they then proceed to justify themselves by claiming that it is more “dignified” for a worker to be on welfare than to work at a low wage. This of course, is the doctrine of many people on welfare themselves. It is truly a strange concept of “dignity” that has been fostered by the interlocking minimum wage-welfare system.

Many of our social problems can be traced to the young being unemployed rather than having something productive to do. I have watched young people up close for decades: they love to be productive and appreciated. It is long past time that all laws that interfere with the employment of people in any fashion be done away with.

If you think that this essay is only about the young people and their unemployment woes — think again. The shipping of jobs overseas and the replacement of people with changing systems are also impacted by government intervention. Your own government mandated health insurance costs (made astronomical by the State in the first place) may cost you your own position.

The State is the enemy.


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